Addressing Poverty in Practice

Flip through the Sustainable Development Goals we aim to address when working on issues related to poverty:

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Multilateral Definitions of Poverty

• OECD: Development Assistance Committee (DAC) 

  The SDC understands poverty as a multifaceted phenomenon that touches all aspects of life, undermining human dignity and well-being. As a member of the Development Assistance Committee (DAC) of the Organisation for Economic Cooperation and Development (OECD), the SDC subscribes to the DAC definition of poverty encompassing five inter-linking dimensions, with gender as a transversal issue since globally, women are more likely to experience poverty than men. The five dimensions of poverty are: economic, human, political, socio-cultural and protective – as shown in DAC's multidimensional poverty framework below.

  What is Poverty?

  The widening meaning of poverty. The concept of poverty includes different dimensions of deprivation. In general, it is the inability of people to meet economic, social and other standards of well-being. The multidimensionality of poverty is now widely accepted. It is based solidly on research that includes major participatory studies of what poor people mean by poverty.

  Defining Poverty: The Core Dimensions

  
  An adequate concept of poverty should include all the most important areas in which people of either gender are deprived and perceived as incapacitated in different societies and local contexts. It should encompass the causal links between the core dimensions of poverty and the central importance of gender and environmentally sustainable development.

  • Economic capabilities mean the ability to earn an income, to consume and to have assets, access to productive resources: land, animals, forests and decent employment.
  • Human capabilities are based on health, education, nutrition, clean water and shelter.
  • Political capabilities include human rights, a voice and some influence over public policies and political priorities. Powerlessness aggravates other dimensions of poverty.
  • Socio-cultural capabilities concern the ability to participate as a valued member of a community. They refer to social status, dignity and other conditions for belonging to a society which are highly valued by the poor themselves. Social isolation is the main meaning of poverty for people in many societies.
  • Protective capabilities enable people to withstand economic and external shocks. Insecurity and vulnerability are crucial dimensions of poverty with strong links to all other dimensions. To a large extent, poverty is experienced intermittently in response to seasonal variations and external shocks – natural disasters, economic crises and violent conflicts. Dynamic concepts are needed because people move in and out of poverty.

  «An adequate concept of poverty should include all the most important areas in which people of either gender are deprived and perceived as incapacitated in different societies and local contexts. It should encompass the causal links between the core dimensions of poverty and the central importance of gender and environmentally sustainable development»

  Source: DAC Guidelines: Poverty Reduction (link)

  

• United Nations

  Eradicating extreme poverty for all people everywhere by 2030 is a pivotal goal of the 2030 Agenda for Sustainable Development. Extreme poverty, defined as surviving on less than $2.15 per person per day at 2017 purchasing power parity, has witnessed remarkable declines over recent decades.

  However, the emergence of COVID-19 marked a turning point, reversing these gains as the number of individuals living in extreme poverty increased for the first time in a generation by almost 90 million over previous predictions.

  Even prior to the pandemic, the momentum of poverty reduction was slowing down. By the end of 2022, nowcasting suggested that 8.4 per cent of the world’s population, or as many as 670 million people, could still be living in extreme poverty. This setback effectively erased approximately three years of progress in poverty alleviation.

  If current patterns persist, an estimated 7% of the global population – around 575 million people – could still find themselves trapped in extreme poverty by 2030, with a significant concentration in sub-Saharan Africa.

  A shocking revelation is the resurgence of hunger levels to those last observed in 2005. Equally concerning is the persistent increase in food prices across a larger number of countries compared to the period from 2015 to 2019. This dual challenge of poverty and food security poses a critical global concern.

  Source and further information: Sustainable Development Goal 1: End poverty in all its forms everywhere (link)

• The World Bank

  The World Bank's mission is sustainable poverty reduction. Poverty encompasses lack of opportunities (including capabilities), lack of voice and representation, and vulnerability to shocks. The Bank's support for poverty reduction is focused on actions, consistent with its mandate, to increase opportunity, enhance empowerment, and strengthen security. Within this broad framework, a critical priority is promoting broad based growth, given its proven importance in reducing poverty. For more information, click here»

Measuring and Analysing Poverty

A wealth of data exists that can help us to understand poverty and there are multiple ways to analyse this data to reveal different aspects of poverty, inequality and how it impacts on people.

• Economic Poverty

  A common entry point is to measure economic poverty using data on consumption or income. This data is usually collected through household surveys and can be analysed with respect to absolute or relative poverty thresholds. At the international level, the World Bank has established $1.90/day as the absolute threshold for extreme poverty based on what it estimates is necessary for survival in a low income country. Anyone with consumption or income below this is considered to live in extreme poverty. Other, higher, absolute thresholds exist, which are considered more appropriate in relatively higher income country contexts. Relative poverty is understood as an income or consumption that is significantly lower than the population average.

• Multidimensional Poverty

  Beyond the economic sphere, it is also important to measure the broader deprivations people may face. This includes access to health and education, meeting physical needs for housing and water as well as rights and freedoms. The Multidimensional Poverty Index uses household survey data that measures a range of outcomes across three dimensions of health, education and living standards, to compile a single index of poverty. The Sustainable Development Goals draw on a wide variety of data sources to provide a dashboard of 142 different indicators which measure different aspects of poverty. Several wellbeing dashboards and indices have also been developed, which measure a comprehensive range of outputs, including mental health and social support, which determine the quality of people's lives.

• Data Sources

  • Economic poverty trends: global, regional and national – 2023 Factsheet by Develpoment Initiatives (link)
  • UN Sustainable Development Goals – SDG Indicator Database (link)
  • World Bank Poverty and Inequality Platform (link)
  • World Inequality Database (link)
  • Global Multidimensional Poverty Index (MPI) – 2023 Report (link)
  • World Poverty Clock by the World Data Lab (link)
  • UNICEF Multiple Indicator Cluster Survey - MICS survey data (link)
  • Demographic and Health Survey - DHS survey data (link)

• Limitations of Poverty Data

  Internationally comparable data on economic and multidimensional aspects of poverty have their limitations. The surveys that collect much of this data are conducted at the household level and therefore do not allow for disaggregation within households, enabling us to identify individual differences by variables like gender, age and so on. These surveys can also miss particularly marginalised and excluded groups, such as those people incarcerated, and are only conducted every few years and so are generally several years out of date for any given country at a point in time. As such, it is important to draw on a range of different data and measures to understand how poverty manifests itself in a place.
  
  Administrative data for example can provide insights on service users and their outcomes. Community generated data, quantitative and qualitative can provide important insights from the lived experiences of those living in poverty. A breadth of data and measures should be analysed for a more thorough and context specific understanding of poverty.

Pro-Poor Policies

Development thinking has moved a long way from the theory that broad economic development is good for all – few today would argue that the «trickle down» theory works in practice. Pro-active approaches addressing poverty may focus on one or more aspects of the phenomenon, depending on the context and the theory of change of the intervening agency. All these aspects may be addressed at different levels, from social protection measures at policy and legislative level to micro-interventions.

Examples of Pro-Poor Measures

• Addressing economic poverty: facilitating access to affordable credit (micro-credit, group banking, etc.); promoting income generation-generating opportunities (one specific approach being Making Markets work for the Poor, M4P); supporting dignified employment (including equal pay for equal work); and the increasingly popular measure of cash transfers.
• Building human capacities: promoting access to education for all – often entailing targeted scholarship for girls or other disadvantaged children; vocational skills training, and a wide variety of other long or short term training schemes, possibly targeted to particularly disadvantaged groups.
• Addressing political aspects of poverty: informing disadvantaged people of their rights and providing access to legal support; facilitating collective action; and building public speaking and negotiation capacities.
• Addressing socio-cultural aspects of poverty (this can require particularly carefully tailored interventions): facilitating the full and equal representation of different groups of people in community decision-making processes; working with both men and women to combat gender-based violence and mutilation; and supporting discriminated groups and individuals to claim their human rights.
• Building protective capacities: these measures concern the ability of people to withstand domestic and external shocks such as a severe illness or accident of a family member, or the loss of possessions following a flood or war. Insecurity and vulnerability are crucial aspects of poverty and may be particularly relevant in humanitarian crises in which identifying the most vulnerable can be a matter of life or death.